Boeing to cut up to 1,700 engineering jobs, lay off 700

SEATTLE — Boeing has begun to ax engineering jobs at its Commercial Airplanes unit as its latest jet programs shift from development to production, and will lay off as many as 700 manufacturing engineers this year.

Managers learned Thursday that Boeing aims to reduce the engineering work force by up to 1,700 positions by year end through attrition and layoffs. Layoff notices to the first 100 of those employees will go out today.

An internal “talking points” memo for Boeing managers states that further layoffs in other areas of engineering are possible and that it will be “18 or more months” before hiring of engineers resumes.

In an email, Vice President of Engineering Mike Delaney said the reduction is needed because development work is now complete on the 747-8, the 787-9 and the Air Force tanker.

Downsizing the work force as new jet programs transition to more routine production has been a cyclical pattern at Boeing over the decades.

Delaney’s email cited another factor, too: The layoffs might have been avoided, he said, if Boeing had launched its 787-10 and 777X programs.

At one time, both programs were expected to launch last year. It’s now widely anticipated that both will launch later this year.

“I realize this news may be surprising,” Delaney wrote. “Commercial Airplanes has been on an upswing for several years. We continue to ramp up production on our major programs, and the prospect for future development work is very positive.”

Boeing clearly still needs many engineers on the 737 MAX jet development program, but “overall, we must reduce our engineering employment level by 1,500 to 1,700 positions during 2013,” Delaney wrote.

He said Boeing has “significantly scaled back external hiring” in the past year and since last October has let go almost 700 contract employees.

“We hope to mitigate the number of layoffs through the reductions we are making in contract labor, by natural attrition and by not filling many open positions,” Delaney wrote. “Unfortunately and unavoidably, we must take additional actions.”

The bottom line is that “through the rest of 2013 we will issue 60-day layoff notices to as many as 700 employees.”

He said the first layoff notices will go out Friday to 100 manufacturing engineers.

Last week, a manager on the 787 program sent an email to the manufacturing engineers warning them of an imminent downsizing.

The internal “talking points” memo states that the 700 announced layoffs focus on manufacturing engineers in Washington’s Puget Sound region and that “future layoffs could impact other parts of . engineering.”

The memo also says engineering staffing at Boeing South Carolina “does not require reductions.”

Ray Goforth, executive director of Boeing’s white-collar union, the Society of Professional Engineering Employees in Aerospace, or SPEEA, said he’s concerned that Boeing is cutting employees at the same time as it is sending engineering work off-shore.

“I’m disappointed that work is being outsourced to the Moscow Design Center while people here are being laid off,” said Goforth.

Rich Plunkett, SPEEA’s director of strategic development, said a manufacturing engineer who does “installation planning” on the 787 program - that is, working out the sequence of production and the order in which parts are installed during assembly of the jet - reported that he’s been told “throw all the installation planning you can direct to Moscow.”

According to Plunkett, the manufacturing engineer said his function “will revert to simply managing the work of the Design Center in Moscow.”

In response, Boeing spokesman Doug Alder said, “The Moscow Design Center has also come down from its peak employment numbers, just like other areas of the company.”

Delaney’s message underlines the importance of the forthcoming 787-10 and 777X programs, while at the same time suggesting that delays in deciding to move forward with those jet programs have been very consequential.

“Potential development programs for the 787-10X and 777X, which might have provided opportunities to avoid these layoffs, have not been formally approved and launched,” he wrote.

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Early in 2012, then-chief executive of Boeing Commercial Airplanes Jim Albaugh spoke publicly of putting a 777X proposal to the company’s board in Chicago by the end of last year, with a go-ahead on the 787-10 perhaps coming even before that.

But by last fall, after Albaugh abruptly resigned in June, that talk faded. Boeing’s board has not announced a decision on either program.

“The challenge we are facing is that those yet-to-be-launched programs are too far out for us to maintain present levels of employment,” Delaney said.

The internal “talking points” memo pins down the gap in engineering requirements.

“This creates a lengthy time period (18 or more months) before workforce needs for those programs would begin rising to current levels,” the memo states.

And yet, the aviation industry certainly considers both programs still on the near-term horizon.

The Boeing board is expected to meet later this month to approve offering the 777X. That is one step before a formal launch, which would typically follow within months.

Likewise, the 787-10X is also expected to launch this year.

Launch of either or both programs normally would trigger an uptick in engineering needs.

Boeing’s Alder said the layoffs do not indicate any further delay to 777X or 787-10.

“Our timing for both remains the same,” Alder said. “There is no impact to study and development on either.”

Delaney’s email to his managers expressed regret at the need for layoffs.